The rent to own retailer Brighthouse has collapsed into administration. Caversham Finance Limited, trading as Brighthouse, is owned by private equity firm Apollo Management.
The company which has stores across Scotland is synonymous with high-interest borrowing that targets the most financially vulnerable with essential household goods from washing machines, beds, sofas and televisions – in what’s known as a rent-to-own credit lending arrangement.
Brighthouse had previously been branded an irresponsible lender, and their interest rates were as high as 99.9% APR on some purchases – it’s no surprise that the stores were positioning in shopping centres and high streets across Scotland, and the rest of the UK where poverty is highest and access to affordable lending at its lowest.
However many debt charities accept that while the sight of disappearing Brighthouses from our Scottish high streets is not widely regarded as any great loss, the unfortunate reality is that they were providing a vital service for people who have no access to adequate lending facilities.
Trust Deed Scotland® advised that “The business model of rent-to-own retailers and in particular Brighthouse, is damaging to Scotland’s most vulnerable people who ultimately end up paying way more than they needed to, for basic household goods.”
“Using credit-risk modelling, these people are deemed to be riskier and therefore more likely to pay more than a person of reasonable creditworthiness.”
“With such a vulnerable market with few options, these people simply have no choice as it was only feasible way of buying household items.”
As well as concerns over Brighthouse customers, the organisation also employed many individuals in Scotland with high stores in towns and cities like Motherwell, Glenrothes, and Inverness.
With many retail and hospitality organisations already struggling and fewer job vacancies opening. There are many hundreds of Brighthouse employees with a precarious financial outlook also.
The administrators have said that while there will be no new lending, all existing outstanding rent-to-own and cash loans remain subject to the original agreed terms. Brighthouse customers will continue to be chased for payment and debt in the same way. Enforcement action including the repossession of Brighthouse goods.
Previously, before going into administration – If you had purchased goods from Brighthouse and fell behind on payments – Brighthouse upheld their rights to repossess their goods. No exceptions were made, be that a television or a children’s bed, the Watford-based organisation were known to be ruthless in their repossession execution strategy.
However, that said – Brighthouse had announced payment break measures in March 2020 to help Brighthouse customers affected by Coronavirus.
Brighthouse Affordability Claims
While being forced to close their high street doors due to the Coronavirus restrictions, the group had been struggling for a long time, with growing refunds owed to customers who were mis-sold goods they could not afford.
In theie Q2 2019/20 unaudited results, BrightHouse warned investors that the company was growing liabilities due to a high volume of customer complaints regarding excessive interest charges on cash loans and repayment interest rates.
Brighthouse stated at the time: ‘We have increased the affordability provision by £5.6m as a result of an increase in the number of complaints received and we have disclosed a contingent liability in respect of our affordability provision’
Similar tougher sanctions on the likes of Brighthouse, have affected other high-interest organisations in recent years. Wonga, the payday lender being one famous example and as recent as March 2020, Peachy Loans another payday loan provider also went into administration.
Amigo Loans, a guarantor loan company being another that has felt the wrath of growing criticism from regulatory bodies and consumer awareness championing. The sub-prime group once labelled as legal loan sharks by MSPs, put itself up for sale in January 2020 amidst profit warnings and turmoil created by rising customer complaints and compensation claims.
Customers mis-sold Brighthouse goods from 2010-2016 were awarded £15m compensation in 2017.
Brighthouse issued a refund of the interest paid, with an extra 8% interest per year added on top of that refund, and any late payments, defaults deleted. However, the Financial Ombudsman said in 2019 that it would allow complaints at any time before 2010 to also be upheld.
Unfortunately, any ongoing affordability claims are usually put on hold for a longer time than usual.
Brighthouse Insurance & Warranty Claims
Brighthouse’s administrator says that insurance, servicing, warranties claims will continue to be provided until further notice for essential items and smaller courier deliveries. This is subject to continuous review. If you’re considering making a claim on your Brighthouse insurance, or warranty – You should do this immediately as it too could be pulled.
Brighthouse Alternative Rent to Own Lending
If you need household goods and there is no other way, you can investigate Fairforyou. Fair for you is a community interest company that claims to challenge high cost lending and says it does this by charging its manufacturers a commission – they will charge 3.5% a month of interest representative 51.1% APR on the products that you buy from them.
Scotcash is a Glasgow-based organisation that offers claims to offer affordable credit to individuals with poor credit ratings, who banks and building societies have been unable to help.
Again, be careful of high-interest loan rates – a loan of £1,000, taken over 52 weeks will give you £940, with a £60 fee and £586.96 of interest; meaning you pay back £1,586.96 in total.
perfecthome.co.uk and payasyougofurniture.com offer services similar to Brighthouse with similar sever financial terms.
When the Coronavirus lockdown restrictions conclude, you can consider Charity Shops such as Shelter Scotland, who offer high standard second-hand furniture goods nationwide.
I’m worried about my Brighthouse debt, what should I do?
If you’re worried about your Brighthouse agreement or any other unaffordable debts, you should seek expert debt advice.
Our team of experienced debt advisors at Trust Deed Scotland® have helped over 25,000 people in Scotland with their debt problems. Our tailored, non-judgemental advice is personalised to you and your situation.
To get started, give us a call on 0141 221 0999 or find what Scottish debt management solutions are open to you. Try our Trust Deed Wizard®